Your firm spends $150,000 a week to pay bills and maintains a lower cash balance limit of $45,000. The standard deviation of your disbursements is $10,000. The applicable interest rate is 6 % and the fixed cost of transferring funds is $35. What is your optimal initial cash balance based on the BAT model?
A) $23,367
B) $33,727
C) $47,697
D) $67,454
E) $95,394
Correct Answer:
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